Partnership and Corporation Practice Exam 2025 - Free Practice Questions and Study Guide

A primary characteristic of a limited partnership is that limited partners have restricted voting power. In a limited partnership, there are two types of partners: general partners and limited partners. General partners manage the business and are personally liable for the partnership’s debts, while limited partners typically invest capital but do not participate in daily management. This distinction is crucial, as it allows limited partners to enjoy certain benefits, such as limited liability, meaning their personal assets are protected beyond their investment, but they also have limited authority to influence business decisions.

This structure encourages passive investment while providing the necessary management control to general partners. The restricted voting power of limited partners ensures that those who are not involved in the management of the partnership do not have a say in its operational decisions, which helps preserve the general partners' ability to act decisively and manage the partnership effectively.